Bottleneck or Turning Point for China in 2012?
30 January 2012 By Leah Lee, CCPIA
Pesticide output in China continued to rise last year, according to CCPIA. The total generation of active substances in the first 11 months of 2011 reached 2.38 million tonnes, a 19.3% rise versus the same period in 2010.
Exports are also increasing. The export volume reached 0.73 million tonnes with a value of $2.21 billion, which is 39.5% higher than 2010. Among them, herbicide’s export volume occupied 62.3%, and its export value contributed 53.4% to the total revenue of crop protection exports.
Although the increases appear to be a boon for China, the profit growth declined in terms of real growth for a second year due to lower product prices. Factors influencing lower margins are increasing prices of raw materials, an appreciating reminbi (Yuan) and a slow recovery of the global macroeconomic market.
The profit rate of the Chinese agrochemical products in 2011 is 5.5%, which is on par with 2010. The situation for some staple products is especially poor, including glyphosate, acetochlor and avermectins, with the profit rate even less than 2%. This margin is indicative of oversupply that has commoditized these products, but some governmental environmental standards could force some low-value producers to exit the supply equation.
It is predicted in 2012 that domestic demand will increase, reaching around 0.32 tonnes, based on the estimate of 3% to 6% demand increase for pesticides. Whether we can see a crop protection industry full of vigor and vitality will depend much on the implementation of the Industrial Policy for Pesticide Industry that was released in last year.
This story was edited by David Frabotta, FCI Editor
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